Towards a low carbon economy in Türkiye: Examining the dual influence of climate finance and policy measures

This study comprehensively explores the complex linkages between Climate Finance and Policy Measures in the context of low carbon transition in Turkey. In the study, carbon footprint bank loans (CFPBL) are identified as an indicator of climate finance, while Environmental Tax (ENTX) and Environmental Protection Expenditure (ENXP) are identified as climate policy measures. The main objective is to assess the impact of these identified variables on the trade in low carbon technologies in Turkey (TLCTR), which serves as the dependent variable symbolising Turkey's transition to a low carbon economy. This includes key economic indicators including annual Gross Domestic Product (GDP) growth rate, Government Efficiency (GEF) and Research & Development expenditure (R&D). Through the combination of these variables, the study aims to provide a comprehensive perspective on the multifaceted dynamics characterising Turkey's transition to a low carbon economy. Using annual data spanning from 1990 to 2022, the study applies a rigorous multi-stage research methodology. The first step is to subject all time series data to unit root testing using the Phillips-Perron (PP) and Augmented Dickey-Fuller (ADF) approaches. Then, the study applies the Engle-Granger Co-integration Test to examine the existence of a long-term relationship (cointegration) between the series in the regression equation. The main findings from the Engle-Granger Co-integration Test provide significant evidence in favour of cointegration. Overall, these results emphasise the importance of cointegration for the reliable interpretation of regression coefficients in the context of time series analysis, highlighting the existence of a significant long-term relationship between variables.